Thursday, November 16, 2006

The Euro Vision: Climax's Karl Jeffrey Bullish On UKIt's something of an irony that as the sharp end of the games industry winds itself into a maelstrom of fourth quarter cut and thrust in terms of releases (although actually for most companies Christmas is accounted in their third quarter figures), the volume of real news seems to dry up.

Still, the sheer weight of numbers when it comes to autumn and winter games releases remains something to be in awe of. It's struck me particularly this year as this is the first year I've been trying to encompasses even one small part of this output as the DS editor of UK consumer website Pocket Gamer. Does it really make sense for there to be nine DS games released on the 24th of November, including four movie tie-ins: Superman Returns, Eragon, Happy Feet and Flushed Away? To put it in context, that's only one less game released on one Friday than in the whole of August and September.

One such is Climax's CEO Karl Jeffrey, who was still in ebullient mood following the sale of Climax's Racing Studio in Brighton to Buena Vista Games in October. At the time, I suggested it was a bizarre deal in terms of Climax losing its most highly regarded studio, while it seemed unlikely BVG would be interested in the sort of realistic racing simulators it developed.

Personally I'm still not sure about BVG's model - CFO Tom Staggs has apparently told Bloomberg the company is looking to invest $350 million annually on games during the next five to seven years - but the fact that Jeffrey didn't want to sell the studio suggests he got a very good price.

"We've had a lot of money in the bank before; although not this much money in the bank. But I'm happy to let it moulder there for a while," Jeffrey says, when asked about the temptation to start splashing around the new found wealth.

A secondary benefit of selling the studio, which accounted for around a third of Climax's workforce, is an overall reduction in headcount and hence Climax's monthly burnrate. "At times in the past, I've felt like an administrator. I'm happier than I've been for a long time following this deal," Jeffrey continues. "It's great. It feels like I'm running a games company again."

Learning From The Past

Indeed, Climax's new structure - one main studio based in Portsmouth, a smaller handheld studio in London, and a tiny team in LA - demonstrates how quickly the philosophy of running independent game studios has changed. Back in the early 2000s, UK developers, in particular, bulked up employing hundreds of staff, as they bought up studios to create multi-location organizations.

Argonaut Games, headquartered in London, had studios in Cambridge, Oxford and Sheffield. Despite being based in Manchester, Warthog had studios in Texas and Sweden, while Kaboom had three facilities in the Midlands and one in Bath. Between 2003 to 2005, all of these companies went bust, as the risk of developing games, especially original titles, went through the roof.

It's a lesson from history that increasingly cephalopodian US outfits such as Pandemic-BioWare and Foundation 9 (now a massive 725 staff spread across 11 studios), would do well to consider.

Death To Heavy Iron

Even Jeffrey wasn't so canny to avoid fallout from that heady atmosphere; something he now calls the 'Heavy Iron' model. At one point, Climax had a studio in Nottingham, which he admits lost millions of pounds in the attempt to develop a MMOG based on the Games Workshop license Warhammer.

Jeffrey also admits to getting carried away when it came to the company's expansion in the US, which at the time it was announced at the end of 2004, was tagged as 'a crucial part of reinforcing the company's global positioning'.

"It was a learning experience," he says. "Whenever I do something, I do it wholeheartedly," which in this case meant relocating himself to LA, and taking his eye off the core UK business.

It soon became clear, however, that the intense competition for staff in the LA region, as well as the required management overheads, made the situation unsustainable. "I tried to be in two places at once. It doesn't work," Jeffrey comments. Climax still maintains a small team in LA - ironically the 16,000 square foot office remains its largest - but the focus of the company is now firmly back in the UK.

Loving The UK

"I'm bullish. I think UK development is resurgent," Jeffrey states. "We use a lot of outsourcing in China and Eastern Europe, but the costs are going up. They're good for art assets but I don't think I'd trust them with a complete game."

Neither is he worried about the rise of publisher-owned studios. "It's just cyclical. I don't think everything will go in house," he says, pointing out that it will always be more efficient to use external developers for some projects. "If a game goes late, and the team is on your payroll, it's not as if you’re not going to pay them or sue them for late delivery."

So the future for Climax, which still relies on a work-for-hire model as its core business, is to invest in the tools, technology and development processes, which will make it a more efficient partner for the likes of current clients such as Take Two, Eidos, Microsoft, Konami and Midway.

It's also working to develop some original intellectual properties, such as The Fixer. "We've been working on it off and on but after Sudeki [the ill-fated Xbox RPG] we realized we blew our own trumpet too early, so it will probably be another year before people get to see it," he says. Other areas being considered include Xbox Live Arcade-style games and handhelds, especially the DS.

But Jeffery’s bottom line when it comes to running a successful business remains as straightforward as ever. "You have to find your niche and control your costs," he warns.

[Jon Jordan is a freelance games journalist and photographer, based out of a single site in Manchester, UK. He’s very niche and doesn't have any expansion plans.]